It is a sad coincidence that the sudden deterioration in the health of the Palestinian Authority President Yasser Arafat, which necessitated his relocation to France, should have occurred just when Israel has stepped up its offensive against the Palestinians, killing 138 people, and when its Parliament has approved a super-controversial plan for 'withdrawal' from the Gaza Strip. Arafat (75) reportedly slipped into a coma and may well be dead by the time these lines appear.

One can only hope against hope that Arafat survives. In the past, he has bounced back each time he was written off by his adversaries -- whether in 1982, when the Palestinian Liberation Organisation was forced to quit Lebanon, or in 1987, when the popular Intifadah broke out, or again in 1994, when he returned to Gaza from Tunisia. Contrary to Likud Party propaganda, Arafat has never been an obstacle to peace, but rather, a precondition for it. The Palestinian people have always rallied behind him in crisis because he has done more than anyone else to put their cause on the world map through his unparalleled past contribution.

Whatever happens to Arafat -- and whether Israel keeps its promise to let him return -- the Palestinian people must reconcile themselves to the inevitability of a transition to a new leadership. This transition may not be smooth given differences between the next rung of leaders. This comprises Prime Minister Ahmed Qurei, PLO secretary-general Mahmoud Abbas (who was imposed by the United States upon the PA as PM last year), former interior minister Mohammed Dahlan, the charismatic Left-winger Marwan Barghouthi (now an Israeli prisoner), and Rawhi Fattouh. Barring Barghouthi, they lack popular following. Some are tarred with nepotism and patronage of dubious operations. The US and Israel will also cynically try to exploit the PLO's internal differences to prop up a pliant leader.

All those who support the cause of Palestinian nationhood can only hope that the PLO will forge a strong, effective, collective leadership. Truly testing times lie ahead for the Palestinians. They have suffered grievously since the creation of Israel and the expulsion of 800,000 Palestinians from their homeland. The greatest, and most immediate, challenge is offered by Israeli Prime Minister Ariel Sharon's plan to wind up all the 21 settlements in Gaza and four others in the West Bank, beginning in 2005.

The "Disengagement Plan" is opposed by a large number of Palestinians because it is part of Israel's comprehensive strategy tocontinueits occupation under more favourable conditions while freezing the peace process. And as Sharon's senior adviser Dov Weisglass openly says: "When you freeze the peace process, you prevent the establishment of a Palestinian state."

The strategy also aims to expand and secure illegal Israeli settlements in the West Bank. As the Israeli scholar Meron Benvenisti puts it: "[T]he goal is to improve the demographic situation and thereby reducing the danger that the country will cease to be a Jewish state." Sharon is explicit: the withdrawal will "severely harm Palestinians" and end "the dream of a Palestinian state".

After the "withdrawal", Israel will continue to exercise full military control over Gaza's air, sea and land approaches. Israel will reserve the "right" to take "pre-emptive and reactive steps to use force against threats posed from within." As Israeli-Palestinian philosopher and parliamentarian Azmi Bishara puts it: "This means that killing operations, assassinations, and demolition will continue." This is in keeping with Sharon's scorched-earth policy for Gaza, and with his "historic goal" of destroying the Palestinian national movement.

After "withdrawal", Gaza will become a giant prison. Even legally, "withdrawal" won't change Gaza's status as an occupied territory. Under international law, the "occupier" tag will continue. A study by Israel's justice and foreign ministries and its defence forces admits as much. No wonder most Palestinians call the withdrawal "reoccupation".

Through it, Sharon wants to bypass any political process and reconfigure the entire territory of Palestine and make a genuine two-state solution virtually impossible. The strategy to change the facts on the ground is being implemented through a number of measures:

- Confining Palestinians to small pockets (Area 'A', defined by the Oslo accords of 1995-96 to be under the PA's full control, and Area 'B' under "joint" Palestinian-Israeli security), but keeping them out of the fully Israeli-controlled 'C' Area of Palestine.

- Breaking up the West Bank into some 300 enclaves, separated from one another, and joined by roads to which most Palestinians have no access. By contrast, Israeli settlers enjoy full freedom of movement in these, with state protection.

- Imposing a tight system of work-and residence-permits, like South Africa's notorious "Pass Laws", which restrict people's liberties in respect of work and life.

- Erecting a 700-km-long "Separation Barrier" (almost five times longer than the Berlin Wall), and in places eight metres tall, although this has been declared illegal by the International Court of Justice.

The situation in the occupied territories, I found during a recent visit, represents apartheid in practice. Compared to this hellishly brutal occupation and the oppressive intrusion of the Israeli military into daily life, and Israel's conscious policy of impoverishing the Palestinian people and imposing hardship on them, the experience of classic -- and despicable -- forms of colonialism looks like a picnic. The British exploited and oppressed India's people through systematic loot, despotic rule, and destruction of institutions and occupations. But they didn't come and grab your land, occupy your fields or steal most of your water.

By contrast, Israel has confiscated 24 per cent of the area of the West Bank and Gaza and 89 per cent of East Jerusalem for settlements, highways, military installations, etc. It controls 80 per cent of the water resources of the occupied territories and also appropriates a large quantity, equal to one-third of its consumption, from the Jordan River. Fourth-fifths of the water from the West Bank's sole underground aquifer goes to Israel.

Israel's post-September 2000 military campaigns have killed over 3,000 people, including 500 children. According to a UN Conference on Trade & Development estimate, closures and losses from military operations have drained $2.4 billion out of the Palestinian economy. Israel has perfected house demolitions into instruments of terror and impoverishment. These turn the Palestinian people into illegal residents in their own homeland. Since the occupation of 1967, Israel has destroyed 12,000 homes, 5,000 in the last three years alone. It has damaged another 15,000.

In all this, Israel has enjoyed the tacit support of the United States. Six months ago, this support became explicit and emphatic, when Sharon and Bush signed a joint declaration. This cancelled the Palestinian refugees' right to return to their homeland -- afundamental right of individuals and communities under international law. It also put a stamp of approval on Israel's stand that it is "unrealistic" to expect it to vacate all the settlements in the West Bank, which house 420,000 people. These settlements are totally illegal and morally unacceptable. To uphold them is to legitimise the annexation of another territory by military means. No major power justified Hitler's annexation of Czechoslovakia. But the US has just done that in respect of Israel!

The Palestine situation has reached a critical point. The Intifadah has temporarily stalled, and jihadi groups like Hamas have been significantly weakened. The PA's credibility has suffered because of the widespread popular view that its leadership has turned "soft" and indulgent and diverted large sums of money from public services and development programmes. According to an International Monetary Fund investigation, PA officials diverted as much as $900 million to overseas accounts between 1997 and 2003. A committee of the Palestinian Legislative Council found that nearly half of the PA's $326 million 1997 budget had been lost through corruption or mismanagement. Central to this network are "moderate" (read, pliant) leaders whom Israel and the US favour.

And yet, the Palestinian people's will has not been broken, nor their determination to win sovereignty affected. They today face the imminent threat of their land being broken up into a series of Bantustans with no contiguous territory and without sovereign control over their borders or natural resources. This grave danger will not go away even if the US, or the European Union, restrain Sharon. What the Palestinians need most today is leadership. At stake is not just peace in the troubled, turbulent, Middle East, but in the world as a whole.

The festering crisis in Palestine is one of the greatest sources of resentment fuelling popular discontent as well as jihadi intransigence. For millions of Muslims and non-Muslims, it is thetouchstone of whether justice is at all possible within the present global order. Without a resolution of the Palestinian issue, there will be neither justice nor peace in the world's most volatile place -- the Middle East. That's why all of us have a stake in a democratic, secular Palestine free from occupation.